Walmart is now jumping into the used game trading industry with exchange kiosks.  How does this impact Play N’ Trade and Game Stop? I’m certain this is a smart venture for Walmart. A friend of mine interviewed at RedBox and told me the kiosk business model when scaled is tremendously profitable, and I’m sure Walmart has first hand knowledged of this model from having the RedBox DVD kiosks in their stores.  Additionally, attracting young teens into your brick-and-mortar stores undoubtedly is a strategic goal of Walmart.

How greatly this impacts Play N’ Trade and Gamestop is questionable. It is hard to spin this as “helping the industry” as surely Walmart will take more from competitors than it increases the

I contacted Larry Plotnick, CEO of Play N’ Trade for his reaction to the Walmart news.  In response, Larry noted:

1. We have been aware of this test for some time, and have discussed the use of similar kiosks within our own stores; however it does not fit within our business model.
2. The impact of Walmart is taken very seriously, considering the size and scope of their business and we will be watching and tracking their progress in detail.
3. We believe there is positive implications to Walmart “legitimizing” used game and trading to a larger/broader demographic
4. We strongly believe that our customer service, product offering and immediate customer gratification creates a better overall trading venue then does a kiosk type environment.
5. Studies have shown that the significant majority of game trading is done by serious/hardcore gamers that prefer to trade in games for new gaming product (which is typically done in specialty retail not in big box stores)

Larry’s points are fair.  Walmart will never be able to create the gamer atmosphere of Play N’ Trade, and gaming is all about experience.  Nevertheless, I predict that Walmart will expand the market for used games and trading, but eventually will siphon sales from the established players Play N’ Trade and Game Stop…in any industry there will always be some customers that will chase the best price.

More to come….

(photos from NeoCrisis.com)

Looks like Houlihan’s still can’t find the right balance of seating capacity, location, and affordable rent.  Their Stamford franchisee was open 6 months and then closed after not paying for those 6 months.

"There’s a lot of competition, and 250 seats is a lot to fill and a lot of rent to pay," he said. "Sometimes, smaller is better."

The franchise Liquid Capital provides businesses with short-term financing that is secured by receivables.  Think payday loans for businesses, cash now secured by reliable future income.  A fictitious example of this works would be my law firm – clients typically pay their legal bills as late as possible, so if I needed a reliable inflow of cash each month, I could pay a fee to Liquid Capital to give me cash on a predictable timetable.  My responsibility would be to pay back Liquid Capital when the client pays their legal bill.

In theory, the business model works can work great.  Theoretically there are high margins on lent cash, long term working relationships, many customers that need this service, professional atmosphere, and you are providing a needed service to the business community.

BUT…..In real life, the business model struggles.  As this article states, one franchisee said it took him a year to land his first client!  In the past 4 years, 19 Liquid Capital franchisees have closed their doors.  The franchisor also requires a minimum volume of lending of each franchisee, and failure to achieve volume goals can be termination “for cause” according to the franchise agreement.  If you are desperate for clients, inevitably you will lend to riskier borrowers than you would like.  And, collections are a real pain nowadays in the United States with all the laws protecting borrowers and limiting communication and other means to collect debts.  If you are extremely plugged into the community, then potentially this franchise will pay off.

I wouldn’t buy it.